Need to know
- Sometimes it can be tricky to know exactly what your private health insurance policy does and doesn't cover
- If you use your private health insurance for surgery in a private hospital you might be faced with large out-of-pocket fees
- CHOICE experts advise checking with your health fund and clarifying costs before agreeing to any procedure
There are benefits to having private health insurance if you need certain procedures or treatments, such as avoiding lengthy public hospital waitlists and being able to choose your own surgeon.
But there are also costly traps that can apply to you if you need surgery like wisdom teeth removal or a hip or knee replacement. Large costs can also come with using your health insurance if you're pregnant or have diabetes.
It's important to understand what is and isn't covered by your health insurance policy and which conditions or procedures may have limited coverage options.
Before proceeding with a hospital admission, you should check your policy closely or contact your health fund to confirm your level of cover, your excess and any other costs you may be liable for.
On this page:
- 1. Your surgery can come with large out-of-pocket costs
- 2. Dental surgery such as wisdom teeth extraction has conditional coverage
- 3. Pregnancy management fees are never covered
- 4. You might be paying more than you need for insulin pump coverage
- 5. Having surgery at a non-agreement hospital
1. Your surgery can come with large out-of-pocket costs
With many elective surgeries cancelled during COVID-19, elective surgeries in public hospitals still come with long waiting lists.
If you have private health insurance you can avoid these waiting lists and have surgeries such as a hip or knee replacement or cataract eye surgery much sooner. But that could mean a hefty medical bill.
There are many extra costs private patients can face in hospital, while treatment for public patients is free. These include:
- consultations with your doctor
- procedures you aren't covered for (always check with your insurer before starting the treatment)
- excess and co-payments
- pathology services, such as blood tests
- prostheses, such as an artificial hip (though there's always one suitable prosthesis that's free)
- hospital incidentals, such as a TV or medication you take home (though public patients can be charged for these too).
The largest extra cost depends mainly on how much your surgeon, the assistant surgeon and the anaesthetist will charge. The Australian government sets a fee for treatments, procedures, tests and more, and these are listed on the Medicare Benefits Schedule (MBS).
But doctors are not bound by this fee and in many cases will charge more. Health funds have gap schemes under which your fund pays all, or a portion, of the extra charge up to a capped fee.
Review, switch and save
If you want to check whether you're getting the best deal, you can review your health insurance at any time (in fact, it's good practice to do it at least once a year). To help you wade through the options, our insurance experts developed a tool that lets you compare health insurance based on your needs so you can find cover that works for you. Next to cover and cost, the tool also rates how well each insurer helps their members avoid extra costs.
2. Dental surgery such as wisdom teeth extraction has conditional coverage
If you need a dental procedure such as having your wisdom teeth out, you may choose to do so either in the dentist's chair at your dental surgery or in hospital under anaesthesia. If you opt for the dental surgery, you may be able to have a portion of the fee covered under your Extras policy if you have a suitable level of cover and have served relevant waiting periods.
However, if you opt to have wisdom teeth removed as an in-patient in hospital, you may find yourself facing additional out-of-pocket costs.
There are two types of health insurance – Hospital and Extras – and you need both for cover of your wisdom teeth surgery in hospital. There are a number of different costs involved, including hospital accommodation, doctors' fees and dentists' fees.
If you opt to have wisdom teeth removed as an in-patient in hospital, you may find yourself facing additional out-of-pocket costs
Your Hospital policy may pay benefits towards your accommodation or anaesthetist for wisdom teeth extraction but you can only receive benefits towards your dentist/surgeon's surgical fee if you have Extras cover, provided your level of cover includes surgical tooth extraction.
So basically you'll use your Hospital cover for the hospital admission part of the costs, but you'll need to have Extras cover to claim anything back on the surgical fee.
The cost of wisdom teeth removal varies depending on where you live, your clinical circumstances, the treatment options open to you, and which of those you choose. We've listed some examples of average costs below:
- Simple case at your normal dentist (including local anaesthetic) – $149–300 per tooth.
- Complex case in hospital or day surgery by a specialist (day surgery and anaesthetist fee not included) – $315–599 per tooth.
Source: Australian Dental Association (ADA) fee survey, 2022.
Prior to admission to hospital, you should request an estimate of fees from your general dentist or oral surgery specialist, and speak to your insurer to make sure you understand the costs you'll be required to pay before consenting. Read more about dental fees.
Specialists like obstetricians and paediatricians can incur unexpected out-of-pocket costs.
3. Pregnancy management fees are never covered
Both private and public hospitals provide high-quality care for pregnancy and birth in Australia. The main advantage of going private is that you can choose the obstetrician who cares for you during your pregnancy and attends the birth.
However, health funds are not allowed to cover out-of-hospital care for pregnancy management so even if you have private health insurance, large and sometimes unexpected out-of-pocket costs can arise for private care.
For example, each time you visit your obstetrician, you may have out-of-pocket costs unless you're bulk billed, as Medicare only covers 85% of the Medicare schedule fee if you visit a specialist (but it covers 100% if you visit your GP).
Each time you visit your obstetrician, you may have out-of-pocket costs unless you're bulk billed
The amount of your out-of-pocket costs depends on if and how much they charge above the Medicare schedule fee. The largest cost may be the pregnancy management fee, usually between $3000 and $5000, of which Medicare only covers about $330.
CHOICE health insurance expert Uta Mihm says, "If you want to deliver your baby with an obstetrician of your choice in a private hospital, ask them to detail all costs you will be liable for at your first appointment. Check with your health fund for an obstetrician who uses the fund's gap scheme for the birth and one which would attend to you in a hospital that has an agreement with your health fund."
Another thing that won't be covered by your private health insurance is the visit from a paediatrician, which will happen in a private hospital a few days after you give birth.
4. You might be paying more than you need for insulin pump coverage
If you have diabetes, you may require an insulin pump as part of your treatment. If an insulin pump is provided to you as part of an episode of hospital treatment and you have an appropriate Hospital policy, private health insurers are required to pay benefits towards the cost of the pump, as well as the hospital accommodation fees and the doctor's fee.
Some insurers also choose to cover the cost of insulin pumps in cases where hospitalisation is not required and this is listed in the Gold group of cover options.
If insulin pump coverage is the only aspect of top-level Gold cover that you require, you could be overpaying
This may mean you think you need to have an expensive Gold level of cover to make a claim for insulin pumps on your private health insurance.
However, if insulin pump coverage is the only aspect of top-level Gold cover that you require, you could be paying more than you need to. Our CHOICE health insurance experts found some cheaper Bronze policies that include cover for insulin pumps. They include:
- CBHS Corporate Bronze Plus Hospital
- Medibank Bronze Plus Progress
- RT Health (HCF) Bronze Plus Classic Hospital.
And restricted membership funds CBHS Limited Hospital (Bronze Plus) and Teachers Health Mid Hospital (Basic Plus).
You can use our tool to compare health insurance and find the best policy for your circumstances.
Some cheaper Bronze health insurance policies will cover insulin pumps.
5. Having surgery at a non-agreement hospital
Private health insurers negotiate charge agreements with private hospitals around Australia.
If you're admitted to a hospital that your insurer doesn't have an agreement with, you could find yourself facing some unexpected out-of-pocket costs, for example, a daily charge for accommodation.
If you need to go to hospital and you have private health insurance, call your fund and ask which hospitals they have an agreement with so you're protected.
If you need a specialist hospital, such as a psychiatric hospital that treats eating disorders or an IVF clinic, make sure your insurer covers it
And if you need a specialist hospital, such as a psychiatric hospital that treats eating disorders or an IVF clinic, make sure your insurer covers it.
If your insurer hasn't got an agreement with the hospital you need to go to, ask the hospital which health funds they have an agreement with.
You can switch to another insurer until the day before your hospital admission. As long as you switch to a policy with the same level of cover and excess you won't serve waiting times.
Stock images: Getty, unless otherwise stated.
